The quick read: Yes, but usually only inside a short window at the end of the term. Freddie Mac's April 2026 term sheets for its fixed-rate, floating-rate and Conventional Small loans charge no prepayment premium for the final 90 days, and a 2017 conduit CMBS prospectus puts its open periods at approximately 3 to 7 payments before maturity. Pay off earlier and you owe yield maintenance, defeasance or a step-down. For a loan maturing between May and November 2027, start the new loan early, lock if the lender offers an early lock, and fund inside the window.
Can you refinance a commercial loan before maturity without a prepayment penalty?
Yes, you can refinance a commercial loan before maturity without a prepayment penalty when the payoff date falls inside the open period your loan documents define, which on Freddie Mac's fixed-rate, floating-rate and Conventional Small loans is the final 90 days of the term. Outside that window, the documents charge for leaving.
The prepayment clause, not the maturity date, sets the cost of an early payoff. A prepayment penalty comes in several forms, and a loan can pass through more than one over its term. Freddie Mac's fixed-rate term sheet, dated 4/26, states the sequence: yield maintenance until the loan is securitized, a two-year lock-out after securitization, defeasance after that, and no prepayment premium for the final 90 days. If the loan is not securitized within the first year, yield maintenance applies until the final 90 days.
Conduit CMBS loans follow the same shape on their own clock. A conduit CMBS prospectus filed with the SEC on May 17, 2017, covering 47 loans with original terms of 60 to 120 months, says voluntary prepayments generally require a yield maintenance charge or premium unless made within approximately 3 to 7 payments up to and including the stated maturity date. In that pool, 33 of the 47 loans, 66.0% of the initial pool balance, opened for the last 4 payments. That is one pool's schedule, not an industry average, and bank, insurance company and private loans set their terms loan by loan, so read your own note before you plan around a date.
Freddie Mac fixed-rate, floating-rate and Conventional Small (term sheets dated 4/26): no prepayment premium for the final 90 days
2017 conduit CMBS pool of 47 loans (SEC prospectus filed May 17, 2017): open period of approximately 3 to 7 payments
Loans in that pool open for the last 4 payments: 33 of 47, or 66.0% of the initial pool balance
When does the penalty-free window open on a loan maturing in 2027?
The penalty-free window opens on the date your documents fix by counting back from maturity, so on a Freddie Mac loan maturing August 1, 2027 the 90-day window opens on or about May 3, 2027, and on a loan maturing November 1, 2027 it opens on or about August 3, 2027, in our date arithmetic.
A CMBS open period written in payments works the same way: with monthly payments, a four-payment open period covers roughly the last three to four months, depending on how the documents date the first open payment. Get the exact first open date in writing from the servicer.
For an investor whose loan matures between May and November 2027, six to twelve months after this article's date, a 90-day window opens between late January and early August 2027. The Mortgage Bankers Association's maturity survey, released February 9, 2026, counts $875 billion of commercial and multifamily mortgages scheduled to mature in 2026, including $200 billion, or 25%, of balances held in CMBS, CLOs or other ABS, and MBA's chief economist put 2027 scheduled maturities at $652 billion. MBA reports its dollar figures as unpaid principal balances as of December 31, 2025.
Loan maturing May 1, 2027, 90-day window opens (our date arithmetic): about January 31, 2027
Loan maturing August 1, 2027, 90-day window opens (our date arithmetic): about May 3, 2027
Loan maturing November 1, 2027, 90-day window opens (our date arithmetic): about August 3, 2027
Commercial and multifamily mortgages scheduled to mature in 2027 (MBA, February 9, 2026): $652 billion
What does leaving before the free window cost?
Leaving before the free window costs whatever the documents assign to your payoff date: a yield maintenance payment that compensates the holder for lost interest, a defeasance that substitutes Treasury securities for the property, a step-down percentage of the amount prepaid, or, during a lockout, no right to prepay at all.
A 1999 working paper by George Lefcoe, listed by the USC Lusk Center for Real Estate, describes yield maintenance as a lump sum covering the lender's potential loss from reinvesting prepaid sums, and defeasance as providing Treasury obligations exactly matching the cash flow of all scheduled mortgage payments. Our guide to how commercial loan prepayment penalties work walks through each calculation.
Close to the window, yield maintenance shrinks. The 2017 prospectus describes one form as the greater of a specified percentage of the amount prepaid or the present value of the remaining payments through maturity or the start of the open period, discounted at a Treasury-based rate, less the principal prepaid; another form is, in some cases, not less than 1.0% of the amount prepaid. The discount rate generally tracks the Treasury maturing closest to that date or to the loan's remaining weighted average life, sometimes plus a fixed spread, so a loan six months from its window is discounted at a short Treasury yield plus any spread.
Illustrative example (rough, our arithmetic, not a payoff quote): the 2017 pool's weighted average mortgage rate was 4.6647%, and Treasury's daily par yield curve put the 6-month yield at 4.28% on October 29, 2026. On a $10 million loan at 4.6647% six months before its open period, with no added spread, the gap of about 0.38 points is worth roughly $19,000 before discounting. Where the documents set a 1.0% minimum, the $100,000 floor governs instead. Ask the servicer for a written payoff figure at your intended closing date.
Step-downs work by the calendar. Freddie Mac's floating-rate term sheet offers four lock-out/prepayment schedules, each free for the last 90 days: Option 1 is locked out in year 1, then 1%; Option 2 runs 3%, 2%, then 1%; Option 3 steps from 5% to 1% by year 5; Option 4, for 10-year capped loans only, starts at 7%. In years 6 and 7 of a 7-year floating loan, every option available on that term charges 1%.
How do prepayment terms compare across common commercial loans?
Across the five loans compared below, the free window is short and sits at the end: 90 days on all three Freddie Mac term sheets and roughly 3 to 7 payments in the 2017 conduit pool, while the SBA 7(a) fee works the other way, applying only in the first three years of a 15-year-plus loan.
Table: prepayment terms and penalty-free windows by loan (source dates in the last row)
| Term | Freddie Mac fixed-rate | Freddie Mac floating-rate | Freddie Mac Conventional Small | 2017 conduit CMBS pool | SBA 7(a), 15+ year maturity |
|---|---|---|---|---|---|
| Term Loan terms | Freddie Mac fixed-rate 5 to 10 years, up to 30 if not securitized | Freddie Mac floating-rate 5, 7 and 10 years | Freddie Mac Conventional Small 5, 7, 10, 12 or 15 years | 2017 conduit CMBS pool 60 to 120 months, original | SBA 7(a), 15+ year maturity 15 years or more |
| Term Exit before the window | Freddie Mac fixed-rate Yield maintenance until securitized, 2-year lock-out, then defeasance | Freddie Mac floating-rate One of four schedules, from a year-1 lock-out to 7% stepping down | Freddie Mac Conventional Small Same as fixed-rate; step-down available at added cost | 2017 conduit CMBS pool Lockout, defeasance or yield maintenance, loan by loan | SBA 7(a), 15+ year maturity SBA fee of 5%, 3% or 1% of all prepayments in a 12-month period in years 1 to 3, once they exceed 25% of the highest balance |
| Term Penalty-free window | Freddie Mac fixed-rate Final 90 days | Freddie Mac floating-rate Final 90 days | Freddie Mac Conventional Small Final 90 days | 2017 conduit CMBS pool Approximately 3 to 7 payments; 4 for 66.0% of balance | SBA 7(a), 15+ year maturity After the third 12-month period |
| Term Rate lock on a new loan | Freddie Mac fixed-rate Early lock, typically 60 to 120 days to purchase; Index Lock | Freddie Mac floating-rate Early lock, typically 60 to 120 days to purchase | Freddie Mac Conventional Small 60-day spread lock after application; Index Lock may be available | 2017 conduit CMBS pool Not in source | SBA 7(a), 15+ year maturity Not in source |
| Term Source | Freddie Mac fixed-rate Term sheet dated 4/26 | Freddie Mac floating-rate Term sheet dated 4/26 | Freddie Mac Conventional Small Term sheet dated 4/26 | 2017 conduit CMBS pool SEC prospectus, May 17, 2017 | SBA 7(a), 15+ year maturity 13 CFR 120.223 |
The SBA column runs opposite to the others. Under 13 CFR 120.223, the fee applies only when voluntary prepayments exceed 25% of the highest outstanding balance in one of the first three 12-month periods after first disbursement, so a 7(a) loan near maturity is long past it.
Can a new loan close inside a 90-day window?
A new loan can close inside a 90-day window when the application, third-party reports and rate lock start before the window opens, so that only the funding and payoff land inside it; Freddie Mac's fixed-rate term sheet, for example, describes early rate locks typically running 60 to 120 days until Freddie Mac purchase.
Work backward from the first open date, not from maturity: about May 3, 2027 on the August 1 maturity above. Aim to fund in the first half of the window, so a closing that slips a few weeks still lands before maturity instead of tipping the old loan into default. That puts term sheets, the application and third-party reports in the months before May, with the lock timed to run to funding. The floating-rate sheet describes the same early-lock range, and the Conventional Small sheet offers a spread lock for 60 days after application.
Calendar these dates before asking for terms:
- The first open date, confirmed in writing by the servicer
- The written notice required before a payoff, and whether it must fall on a payment date
- The target funding date early in the window, and the latest acceptable date before maturity
- The lock period the new lender offers, and the date it must start to reach funding
Should you lock the new rate before the free window opens?
Locking the new rate before the free window opens makes sense when the lender's early lock covers the gap to funding, because it fixes the coupon on the new loan without paying the old loan's premium; the cost is whatever the lender charges for the lock, which you should get in writing first.
Rates have moved enough in 2026 to make the lock a real decision. Treasury's daily par yield curve put the 10-year yield at 4.19% on January 2, 2026, at its 2026 low through October 29 of 3.97% on February 27, at its 2026 high of 5.31% on October 5, and at 4.98% on October 29, 2026. On October 28, 2026 the FOMC held the federal funds target range at 3-3/4 to 4 percent by a 10 to 2 vote, and the two dissenting members preferred a quarter-point increase. Those are published readings, not a call on where yields go next.
Freddie Mac's term sheets describe Index Lock as a way to lock in the most volatile part of the coupon, the Treasury index. Illustrative arithmetic (ours): on a $10 million loan, every 0.25 point on the new coupon is $25,000 a year of interest, or $250,000 over a 10-year term before amortization and discounting. A lock that reaches into the window can matter more than the old loan's premium. Ask each lender for the lock's cost, its deposit, and what happens to that deposit if closing slips past the lock.
When does paying to leave early beat waiting for the window?
Paying to leave early beats waiting only when the new loan's savings, a sale deadline or a locked rate are worth more than the premium, and a 1% premium on a $10 million balance, $100,000 in our illustrative arithmetic, works out to 4 percentage points a year over the three months it saves.
Illustrative example (our arithmetic, $10 million balance, 1% premium): the earlier you pay, the thinner the premium spreads, but the new loan still has to earn it back.
Paid 3 months before the window: $100,000, or 4.0 points a year over those months
Paid 6 months before the window: $100,000, or 2.0 points a year
Paid 9 months before the window: $100,000, or about 1.33 points a year
Paid 12 months before the window: $100,000, or 1.0 point a year
The case for paying usually rests on something other than rate savings: a buyer's closing date before the window, a cash-out that funds a renovation on a fixed timeline, or a lock that cannot stretch to the open date. The opposite risk is waiting for the window and then missing maturity, which puts the old loan in default, so a loan with three months left may already be inside its window and should be on a closing track now.
How do you get a pre-maturity refinance placed before the window closes?
You get a pre-maturity refinance placed in time by putting a complete package, including the current loan's prepayment schedule and open-period date, in front of competing lenders months before the window opens. YieldStack, which publishes this guide, is our first pick for that work, for the reasons below.
- YieldStack: our top pick for AI-native commercial mortgage brokerage. YieldStack is an AI-native commercial mortgage brokerage that arranges financing for commercial real estate investors. Software searches 20,000+ loan programs and compares the options; human brokers build the request around your open-period date, negotiate the lock and closing timeline on your side, and carry the loan toward closing. The median first offer arrives in under an hour, from an institutional lender. It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing. Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed.
- Going lender by lender yourself, which works when you can run several applications and lock negotiations in parallel against a fixed window.
- Asking the current lender about an extension, which buys time but leaves the rate and terms to one counterparty.
Whichever route you take, the package carries:
- The current note's prepayment section, first open date and payoff figure at your target date
- Rent roll and trailing 12-month operating statement
- Target loan amount, hold period and the prepayment terms you can accept on the new loan
- The maturity date and the latest acceptable funding date
When it is ready, send the refinance for review before your window opens.
The bottom line
Yes, you can refinance a commercial loan without a prepayment penalty, but usually only inside the open period at the end of the term: the final 90 days on Freddie Mac's fixed-rate, floating-rate and Conventional Small loans, and a few payments in the conduit pool we read. Start the new loan before the window opens, lock if the lender's early lock reaches funding, and fund early in the window.